Banking What is going on with the Blue dollar? Why is it going down?

[Vero]

Interesting, what does he base that on? My favorite "Big Mac Index" is always fun to compare currencies, says the peso is 15% overvalued: https://www.economist.com/big-mac-index

We locals just don't understand how we can pay so much for everything. Today I got a coffee in Palermo for 5,000 pesos which is about $4 US dollars. How does that make sense? The same price that you would spend in the States or London when our incomes are a fraction of other countries. That simply doesn't make sense to us.

 

[CraigM]

We locals just don't understand how we can pay so much for everything. Today I got a coffee in Palermo for 5,000 pesos which is about $4 US dollars. How does that make sense? The same price that you would spend in the States or London when our incomes are a fraction of other countries. That simply doesn't make sense to us.

Ah yes. Of all the things we consumed in Argentina, coffee was the closest to US prices. I noticed it each morning but never thought to ask why. Sure did taste good though.

 

[Digital Nomad]

Ah yes. Of all the things we consumed in Argentina, coffee was the closest to US prices. I noticed it each morning but never thought to ask why. Sure did taste good though.

Yeah good coffee here is expensive, especially considering salaries are so low. I think there are a lot of import taxes on the coffee beans and then restaurants just get greedy and way mark up the rates. I am always amazed how full some of these coffee shops in Soho are especially considering the price and how little locals make. Sure, lots of tourists in BA but there are a lot of locals buying coffee too.

I just think that people are accustomed to getting raped on coffee prices.

 

[Larry]

It is a joke how much coffee costs here at cafes now. I am noticing now at places like Starbucks it is not crowded like before. I wonder if people are cutting back on staples like coffee during this recession. I would have to believe so.

 

[fetch rover]

Ah yes. Of all the things we consumed in Argentina, coffee was the closest to US prices. I noticed it each morning but never thought to ask why. Sure did taste good though.

Be grateful at least there is good quality coffee in Buenos Aires now. My husband lived in BA during the last 90's and he said the coffee was terrible! They didn't have all of the better quality coffee like today. Most of it was very bitter and very poor quality he said.

I would rather pay more and have good quality than cheap and poor quality. Argentines like bitter coffee. The cafe torrado which is illegal in many countries so it seems like the tastes are changing a bit.

 

[jamess]

Importing coffee from producing countries like Brazil and Colombia involves import costs, tariffs, and exchange rate fluctuations, which drive up the final price, making it an expensive product here. I'm not a big coffee drinker myself, I’ve gotten used to drinking mate, and I love it. I only drink coffee occasionally, which I think helps my budget.

 

[Finance Prof]

What I wonder is what would the exchange rate be if they just let it float freely without manipulating it? It's only this low because of all the efforts by the government but what happens if the government doesn't do all of these measures? My girlfriend's father who is in business and finance here told me it should be over 2,000 to $1.

No doubt the exchange rate would be different without the constant intervention. Not sure how long they will keep it up. If/when they stop the gap should go back up.

Almost US$500 million have been lost to lower parallel dollar rates - Buenos Aires Herald

Analysts estimate the government has spent that much to contain the exchange rate gap since announcing ‘Phase 2’ of its economic plan in mid-July

buenosairesherald.com

 

[Faith]

No doubt the exchange rate would be different without the constant intervention. Not sure how long they will keep it up. If/when they stop the gap should go back up.

Almost US$500 million have been lost to lower parallel dollar rates - Buenos Aires Herald

Analysts estimate the government has spent that much to contain the exchange rate gap since announcing ‘Phase 2’ of its economic plan in mid-July

buenosairesherald.com

Many people that I speak to also tell me that the peso is artificially strong and some even say it should really be about 1,900 to $1 USD. Not sure where they are getting that figure but they tell me the minute the government stops with the intervention it will shoot back up. What are all of you doing? Just continuing to buy pesos as needed?

 

[Betsy Ross]

Many people that I speak to also tell me that the peso is artificially strong and some even say it should really be about 1,900 to $1 USD. Not sure where they are getting that figure but they tell me the minute the government stops with the intervention it will shoot back up. What are all of you doing? Just continuing to buy pesos as needed?

No matter what over the past many years living here in Argentina it, the US Dollar has always come back with a vengeance. Back a few months ago when it went up to 1,500 pesos to $1 Dollar I exchanged enough for 2 months worth of expenses. It probably would have been better to exchange more but my personal rule is to never buy more pesos than 2 months at a time.

Sometimes the blue dollar goes down like now but it only is because of all the manipulating. I will just continue with the plan of buying 1 month at a time.

 

[Bill]

Many people that I speak to also tell me that the peso is artificially strong and some even say it should really be about 1,900 to $1 USD. Not sure where they are getting that figure but they tell me the minute the government stops with the intervention it will shoot back up. What are all of you doing? Just continuing to buy pesos as needed?

I just stick to buying enough for the next month. I wish I loaded up on more pesos when it went to 1500 but I have done that before only to watch it go higher. Waiting to see how long the government keeps going with their current plan.

 

[CecilM]

Today I exchanged enough for a month, and it was changed at 1290. It’s dropping a lot, but here we don’t know, maybe it will spike tomorrow.

 

[Digital Nomad]

Today I exchanged enough for a month, and it was changed at 1290. It’s dropping a lot, but here we don’t know, maybe it will spike tomorrow.

View attachment 7089

I just started seeing that Cocos rate on some websites. Looks like they have enabled the ability to pay with USD on their app at the MEP rate. I don't have a DNI but looks like locals are excited about this.

https://twitter.com/x/status/1831369361606767049

Cocos | Cocos Capital

Empezá a operar en el mercado a través de Cocos Capital. Unos pocos clicks y estás potenciando tus ahorros. FÁCIL, INCLUSIVO Y SEGURO.

cocos.capital

 

[Blockchain]

The exchange rate seems like it's heavily controlled. I thought Libertarians were against socialistic controls of manipulating the markets but looks like they are doing the same thing to control the exchange rate. Seems like no one can answer what would happen if they stopped doing that and let it float freely.

 

[Wally]

The exchange rate seems like it's heavily controlled. I thought Libertarians were against socialistic controls of manipulating the markets but looks like they are doing the same thing to control the exchange rate. Seems like no one can answer what would happen if they stopped doing that and let it float freely.

They are being forced into it. It ain't free floating. There is so much manipulation no telling what will happen later this year or next year. But the rule of thumb is the US dollar always rules over the long term. Frustrating watching it go down but we are about where we were in January. Dollar always wins in the end in Argentina.

 

[Finance Prof]

They are being forced into it. It ain't free floating. There is so much manipulation no telling what will happen later this year or next year. But the rule of thumb is the US dollar always rules over the long term. Frustrating watching it go down but we are about where we were in January. Dollar always wins in the end in Argentina.

Very true. Most always will choose to convert and save in dollars vs. pesos. You can see the INDEC website and download an excel spreadsheet and it will give you the monthly price of the basic basket of goods (canasta basica) and you can see the graph. You can graph the price increase over a certain period of time.

https://www.indec.gob.ar/

 

[turtle]

@Wally I hope you're right, and the dollar keeps strengthening as the main hard currency. It dropped quite a bit today, but in Argentina, anything can happen from one moment to the next.

https://twitter.com/x/status/1832070716558037457

 

[noname]

As long as the CCL drops, the blue dollar will also go down. Plus, the capital amnesty is progressing, which is evident in the increase in dollar deposits. The reduction of the "Impuesto País" has also contributed to this sharp drop in the parallel dollar. It seems like everything is going the way the government wants, but we all know the economy in this country is always in flux.

https://twitter.com/x/status/1831765565339238700

 

[Uncle Wong]

Wow the blue dollar looks to be the same as MEP so it's the same now to use a foreign credit card vs. exchanging cash at cuevas?

 

[greiger]

As long as the CCL drops, the blue dollar will also go down. Plus, the capital amnesty is progressing, which is evident in the increase in dollar deposits. The reduction of the "Impuesto País" has also contributed to this sharp drop in the parallel dollar. It seems like everything is going the way the government wants, but we all know the economy in this country is always in flux.

https://twitter.com/x/status/1831765565339238700

Yes, the capital amnesty is the major factor directly influencing the value of the parallel dollar. In fact, dollar deposits increased by USD 5.5 billion under Milei, reaching their highest level since 2019. I'd advise you to exchange your dollars now because, according to Caputo, it will keep dropping until it matches the official rate.

Los depósitos en dólares aumentaron USD 5.500 millones con Milei y tocaron su mayor nivel desde 2019

El crecimiento fue del 38,5% en los últimos 10 meses y el stock alcanzó el nivel más alto desde el día posterior a las elecciones presidenciales de 2019. El aporte del blanqueo de capitales

www.infobae.com

 

[Blockchain]

Yes, the capital amnesty is the major factor directly influencing the value of the parallel dollar. In fact, dollar deposits increased by USD 5.5 billion under Milei, reaching their highest level since 2019. I'd advise you to exchange your dollars now because, according to Caputo, it will keep dropping until it matches the official rate.

Los depósitos en dólares aumentaron USD 5.500 millones con Milei y tocaron su mayor nivel desde 2019

El crecimiento fue del 38,5% en los últimos 10 meses y el stock alcanzó el nivel más alto desde el día posterior a las elecciones presidenciales de 2019. El aporte del blanqueo de capitales

www.infobae.com

But what happens in 2025 when Argentina has to default on all their repayments? Where will the cash come from to pay back all the obligations? Doesn't look like the IMF is going to give more. Net negative reserves so what happens to the exchange rate then?